Employees working away from home in foreign countries need adequate protection from risk

Nassim Nicholas Taleb, international risk analyst and architect of the Black Swan theory, tells the story of a turkey that is fed by the farmer every morning for 1 000 days. Eventually the turkey begins to expect that every visit from the farmer means more excellent food. After all, that’s all that has ever happened, the turkey figures. But then Day 1 001 arrives. When the farmer shows up, he is not bearing food, but an axe. The turkey learns very quickly that its expectations were catastrophically off the mark. And now Mr Turkey is dinner.

Taleb’s advice? ‘Let’s not be turkeys.’ What does that have to do with risk analyses for companies with employees working in countries outside SA, in jurisdictions elsewhere on the continent?

Marsh, a global insurance broker and risk management solution company, says adequate cover for employees working away from home in African countries is ‘pivotal’ to a company’s success.

Travis Briscoe, regional sales leader for employee health and benefits at Marsh Africa in Johannesburg, explains that understanding the appropriate level of risk and insurance required depends on the region where operations are being conducted, as well as the nature of the specific project.

‘Probably the most important aspect of employee cover is that the benefits that are contained in the policy must be accessible,’ says Briscoe. The policy can ‘promise the Earth but all that doesn’t help if something happens and the benefits promised aren’t delivered timeously’.

He notes that the main issue is that companies must provide employees with adequate medical and political insurance cover when they work abroad. Understanding the ever-changing risk environment of a location is important, and an organisation may need to be informed of any instability almost immediately. When an employee is operating in remote and/or foreign locations, often a quick response and administration with suitable flow of information can make a big difference.

Briscoe says that having the benefits paid for from an insurance perspective is important, ‘but you will almost always need someone to assist you, whether it be a guarantee of payment to a hospital or evacuation provider. In the event of death or disability, local regulation and law enforcement will require the assistance of a knowledgeable provider’.

He adds that a typical risk for employees and expats working in African countries is the lack of appropriate medical facilities or centres of medical excellence. As a result, the evacuation of the employee to their home country may also be a scenario that has to considered.

‘Advisers may in instances have a responsibility to place insurance contracts with local South African insurance carriers where there is local market capacity and report to local governing bodies. Consulting an adviser allows for an organisation to fully comprehend the capabilities of market providers and price accordingly. It equally allows for them to be advised of the risks of contracting with international organisations outside of our local governing bodies, for example the Financial Sector Conduct Authority [FSCA],’ according to Briscoe.

Lucinda Hinxman, senior associate at Werksmans Attorneys, explains that in terms of common law and irrespective of the jurisdiction in which employees work, employers are obliged to provide a safe working environment that does not expose employees to any harm and/or risk of harm or danger from a health and safety perspective. Every employer is obliged to assess the risks in the workplace; and where a risk has been identified, the employer must eliminate it or reduce it as far as possible. The employees must also be informed.

Employees working outside SA are covered by section 23 of the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA).

‘If an employee is injured or harmed in the course and scope of his employment while outside of South Africa, and the employee is able to demonstrate that the employer failed to protect him, the employee could potentially claim damages from the employer. However, if the employee is covered by section 23 of COIDA, the employee will not be entitled to claim against the employer.’

The act does not apply to employees who work outside the country continuously for more than 12 months. If they suffer an accident or health issue in the course of their work away from SA, they can attempt, in terms of common law, to sue their employer directly for damages suffered – provided they can prove the injury or health issue and the extent of damages that resulted from it.

On the other hand, employers are protected from direct claims from employees if the employer is covered by the Occupational Health and Safety Act, according to Hinxman.

Richard Treagus, chief risk officer at Old Mutual, says that when it comes to staff travelling at the behest of their employer, it confers certain duties on the employer. The travel involved can be local, international, on a temporary, semi-permanent or permanent basis, and each category has different nuances. ‘For complete peace of mind, the employer would buy travel insurance, which includes baggage/personal effects.’

Treagus warns that for local (within SA) travel, cover for medical events – the key travel risk – is no longer available through short-term insurers, which is why it’s important to ensure that the employee has medical aid cover.

‘Travel insurance plays a central role in securing peace of mind for employers and their employees travelling internationally,’ he says, adding that it provides for costs incurred as a result of a medical event, and other associated costs such as repatriation, emergency evacuation and travel costs of family members to the injured employee. It can also extend to travel delays, flight cancellations and so on.

Some insurers also provide for emergency evacuation in the event of a political event for a lower limit of cover and such cover should be in place too. Short-term travel has no impact on existing medical aid or pension arrangements, although some require prior notification of this travel.

Then there’s the question of product rates. Murray Hewlett, CEO at Affinity Health, explains that the challenge for medical insurance companies offering cover outside SA’s borders is that they are offering private medical cover to a segment of the market that previously could not afford it.

‘Operating within the borders of South Africa allows us the opportunity to negotiate reasonable rates with medical professionals to contain costs while still offering a premium product. Unfortunately, this is a bit trickier when dealing with the medical sectors outside South Africa, operating in various currencies.’

According to Hewlett, some medical aid schemes do offer this benefit depending on the plan and how often the individual returns to SA. ‘However, this is usually accompanied by a fairly hefty price tag.’

Turning to secondment of staff to jurisdictions outside SA, Treagus maintains that things can become tricky. ‘It is important to ensure proper knowledge of the terms of the secondment/employment contract with the foreign entity, in terms of benefits and their transition.’

A good travel insurer will include cover for a maximum of one year – most will do 180 days. Travel insurance generally provides cover for major medical expenses, but companies need to be aware of pre-existing conditions that can occur during the period of travel.

‘Employers also need to consider which of the existing covers remain in place in the home country while the employee is on secondment – this includes group life death and disability cover, pension arrangements and medical aid cover. Similar benefits may also be provided to the employee in the foreign county, in terms of local employment practices,’ says Treagus.

‘Some travel insurers and/or emergency assistance providers have useful apps that allow the employee to receive travel advisory notes regarding their destination, contact the travel insurer and, importantly, provide the employer with real-time data of where their employees are at any given moment and … enable the insurer to pinpoint their exact location – obviously very handy when there’s an emergency.’

Treagus cautions, however, that travel insurance is only as good as the traveller’s knowledge of how to use the cover when the emergency happens. He stresses that employees should be encouraged to programme the insurer’s call centre number into their phones.

Senior C-suite managers and directors will want to know their personal liability is taken care of – both locally and when acting on behalf of a foreign entity and/or when seconded to a foreign entity – by ensuring there is group-wide directors and officers (D&O) liability insurance (ideally) or that the foreign entity has sufficient D&O cover in place if cover isn’t bought on a group-wide basis, according to Treagus.